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Stocks Wobble at Start to the Week

Major U.S. stock indexes slipped on Monday, in a subdued start to the week after closing near record levels last week.

The Dow Jones Industrial Average fell 38 points, or 0.1%, in morning trading. The Dow had briefly pushed into record territory after the opening bell before retreating.

The S&P 500 dropped 0.15%, after the index reached its second-highest close in history on Friday. The technology-heavy Nasdaq Composite declined less than 0.1%.

U.S. stock indexes have been mostly muted in recent trading sessions, with investors assessing a range of factors including the economic outlook, supply-chain problems and high valuations for stocks.

While inflation expectations have eased in recent days, investors remain on edge for signs that Federal Reserve officials may consider pulling back on easy money policies that have supported the rally in equities.

“It almost feels like the market is going to be at a standstill until we get a better clarity on inflation and the growth outlook,” said

Seema Shah,

chief strategist at Principal Global Advisors. “The market hasn’t got any major driver to push it significantly higher.”

Over the weekend, Treasury Secretary

Janet Yellen

told Bloomberg News that President Biden’s spending plan would be good for the U.S., even if it contributes to rising inflation and results in higher interest rates.

“The market is so focused on [inflation] that anything that is going to give an indication of how strong inflation pressures are going to be is going to be a point of focus,” said Ms. Shah. “For Janet Yellen to be talking about the idea of higher rates: it is not shocking, but I do think the market is extremely jumpy.”

Rising interest rates and the prospect of higher inflation, which can erode the value of fixed income payouts, has spurred some investors to sell government bonds and buy assets linked to a broad economic recovery. The yield on the 10-year Treasury note rose to 1.574% from 1.559% Friday. Yields rise when prices fall.

In corporate news, shares of

QTS Realty Trust

jumped 22% after The Wall Street Journal reported that

Blackstone Group

had struck a roughly $6.7 billion deal to buy the data-center operator and take it private. Blackstone shares gained 1%.

Overseas, the pan-continental Stoxx Europe 600 gained 0.4%.

In Asia, major benchmarks were mixed. The Shanghai Composite Index rose 0.2%. Japan’s Nikkei 225 added 0.3%, while Hong Kong’s Hang Seng Index declined almost 0.5%.

Traders worked on the New York Stock Exchange on Thursday.



Photo:

Nicole Pereira/Associated Press

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

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